Have higher fees affected the number of students dropping out?

The latest data reveals little overall effect on undergraduate students dropping out, but there are early signs of emerging trends, particularly among mature students.

The recent HEFCE release of data on undergraduate non-continuation (dropout) rates in 2012-13 gives a first opportunity to look at whether the increase in tuition fees might have affected the proportion of students moving from year 1 to year 2 of their degree programme.

The data shows that the rate of non-continuation across all full-time undergraduate degree students increased slightly from 6.7 per cent to 7.1 per cent between 2011-12 and 2012-13. Even so, this increase is not great enough to suggest a cause of any kind. The rate for 2012-13 is also the second lowest non-continuation rate in the past decade.

The data is reassuring since research into the causes of student dropouts identifies the main reasons as financial problems, academic difficulties, personal problems and mistaken choice of institution or course. All of these might be potentially related to the level of tuition fees.

Why do students drop out?

Students who drop out frequently cite financial difficulties as a key issue, and so it might be supposed that dropout rates would increase when fees rise.

But the financial difficulties that cause students to drop out tend to be due to immediate cash constraints. While the increase in tuition fees increased student indebtedness, it did not impact on the size of maintenance loans, the average value of which increased from £3,670 in 2011-12 to £3,820 in 2012-13.

It has been argued that tuition-fee increases might increase the numbers of students studying closer to home, so they can continue to live in the parental home, take out smaller maintenance grants and keep down their total indebtedness.

Students living at home are more likely to drop out, perhaps because they are less involved in student life, which can lead to both academic and personal difficulties. This implies that increased fees might indirectly increase dropout rates. Early evidence suggests, however, that higher fees have not led to more students staying at the parental home.

Higher fees may, alternatively, encourage prospective students to do more research and consider their options carefully. This should mean they make more informed choices and improve the quality of the match between student, programme and institution, so that an increase in fees could actually decrease the probability of dropping out.

So, overall, the effect of tuition fee rises on non-continuation rates are not easy to predict, and in fact the insignificant increase observed in the 2012-13 data does not give an indication either way.

Young and mature students

While there is not a meaningful change in the overall rates, looking slightly deeper at the data does reveal an interesting observation.

The dropout rate for students aged under 21-years is unchanged at 5.7 per cent, but for mature students aged over 21 the rate increased from 10.3 per cent to 12.0 per cent. This is significant enough to suggest a possible cause.

It is impossible to draw conclusions from a single year of data. A random event or changes in the characteristics of the population of mature students could explain the increase. Some students will, for example, have brought forward their entrance into higher education in 2011-12 to avoid higher fees.

Notwithstanding this, it might be useful to consider whether mature students are more likely to drop out in response to an increase in fees, and there is (at least) one reason to think that they could be.

Assuming students choose whether or not to go to university based on the costs and benefits of obtaining a degree relative to those of not doing so, an increase in tuition fees increases the cost of obtaining a degree for students of all ages.

But mature students are more likely to have experience in the labour market and so they can expect greater benefit from not going to university. They will be able to command a higher wage without a degree and are more likely to find a job. All of which means that the increase in fees is more likely to affect their decisions to participate.

Of course, students at university have already weighed up their options and decided that the benefit of obtaining a degree is great enough to justify going. Still, this benefit depends on an individual’s expectation of the perceived human capital gain, which is how much the skills and knowledge gained from studying will benefit their future career.

If the student struggles academically or the degree does not seem as useful as expected, then the perceived human capital gain will decrease. Since mature students are more likely to have better outside options, then they are more likely to drop out as a result.

The key message from the non-continuation data is that the increase in tuition fees has not had an obviously detrimental effect on dropout rates. When data on future years is released, however, we should be aware that there may be reasons for trends to emerge, especially among groups such as mature students, who could be more affected by fee increases.